Warren Buffett is one of the greatest investors of all time. What you may not know is Warren Buffett uses coaching to help his many organizations’ executives become even more effective leaders.
Over the years he’s become incredibly successful at coaching already great leaders to a higher level. I’ve worked with over 30 different senior executives in Berkshire Hathaway (and continuing to increase with new purchases!) since 1986. Many of these leaders use coaching to build stronger leadership teams.
Many talk about their relationship with Warren Buffett. Actually, most prefer not to talk about Warren, but are open to sharing after you get to know them and their organizations. And they’ve had great returns on the projects you work on together! It’s a nice bonus for me that I can share with you. The story they tell doesn’t focus on Warren as investor, but Warren as their coaching partner.
Over the past 27 years I’ve seen significant changes in Berkshire Hathaway. In 1986, when I started working with his companies, Warren had a net worth of slightly over a billion dollars. Many of his acquisitions were successful family and privately held businesses. Today, he’s acquiring large publicly traded companies. His net worth has grown to over 85 billion dollars. Not bad for a great coach.
So how has his coaching style evolved over the years? I believe he uses several coaching strategies to help get the best out of his senior leaders that we can use in developing our own senior leadership team. Warren Buffett would be first to tell you he has a great team of leaders around him at Berkshire! He believe its the number one asset of his organization!
The first coaching strategy Warren Buffett employs is he gets to know his leaders better than many other successful leaders I have as clients. He expects to be working with his senior leaders, many of whom are CEOs, for many years and he wants to understand what makes them tick. Warren doesn’t use a cookie cutter formula to coach his people. He understands who they are and what their personal and professional agendas are.
He treats each of his leaders with the understanding they are the most valuable part of the organization he acquired. He and Charlie Munger invest time understanding the person first, then the business. They believe that great, hardworking people excel in whatever environment they find themselves. Warren sees his role as helping them see and clarify the many different opportunities that exist to grow their businesses. Charlie helps the leaders develop their critical thinking skills. We will return to Charlie in a future blog.
The second coaching strategy Warren Buffett employs is being very good at understanding the markets of the businesses he acquires. Actually, not only the prime market they are in, but also the many markets that impact their key growth segments. Be it diamonds, fractional jet ownership, or financial services, he understands these industries well. His policy of buying businesses that he can understand provides him the ability to ask probing questions that get his leaders to think differently about their business.
Warren’s coaching navigates out curiosity when working with his fellow leaders. He is great at asking questions at the right time in the best order. His leaders come away feeling focused, energetic, and enthused about the possibilities they discuss. More importantly, they own them!
Many of the leaders I’ve worked with are surprised by how much Warren knows about their business. Warren and Charlie often kid about sitting around the office, reading annual reports. Judging by the feedback I receive, it’s very clear they are well informed in their industries, as well as potential disruption points that could occur as industries evolve and change. Warren also has a network of leaders he can call on when they need additional information about emerging trends. As their coach, he understands the value of his network to apply value to his many organizations.
The third coaching strategy Warren Buffett employs is he is great at active listening. He is very capable of hearing what is not said on a coaching call. He has a low key approach to the conversation, but is very capable of sitting in silence for a period of time while his partner considers the question. Warren is very comfortable asking a dumb question, then listening and following up.
The fourth coaching strategy Warren Buffett employs is providing the right tools to help his people succeed. Warren understands different leaders need different tools to be successful. He provides his senior executives the flexibility to create a culture and strategy that allows them to become market leaders. He provides the capital to help them do this in ways few other organizations can.
Warren helps his team members clearly understand what is expected to deem a project a success. He knows how to help get the best return out of Berkshire Hathaway’s money by helping identify great investments that help his CEOs grow their businesses efficiently. Almost all the leaders I talked with over the years, talk about what they learned from Warren on capital allocation. As you would expect, he is very good at that aspect of his role.
Finally, Warren Buffett is very good at building trust and loyalty among the different leaders of his teams through coaching. They know that he is out to help them produce the best results in their businesses.
Leaders feel a deeper connection to Warren and Charlie that helps them deal with a highly competitive corporate environment at Berkshire Hathaway. They also know that there are different career options for successful executives that grow as senior leaders as Warren Buffett continues to make larger acquisitions. Warren makes sure that not only their business succeeds, but so do the leaders in his many organizations.
What else do you want from a great coach?